After moving sharply lower in early trading on Thursday, stocks regained some ground over the course of the session but still ended the day in the red. Concerns about the outlook for the economy continued to weigh on the markets.
The major averages ended the day in negative territory but well off their worst levels of the session. The Dow slipped 31.26 points or 0.3 percent at 12,573.27, the Nasdaq fell 21.79 points or 0.8 percent to 2,866.19 and the S&P 500 dropped 6.69 points or 0.5 percent to 1,334.76.
With the losses on the day, stocks extended the downward move that has seen since the release of the Labor Department's disappointing employment report last Friday.
The report, which showed weaker than expected job growth in the month of June, raised concerns about the economic outlook that continue to negatively impact stocks.
Traders also continued to digest yesterday's release of the minutes of the latest Federal Reserve meeting, which gave no hint that a third round of quantitative easing is imminent.
Meanwhile, traders largely shrugged off a report from the Labor Department showing a notable drop in weekly jobless claims, as the decrease largely reflected seasonal distortions.
The report showed that jobless claims fell to 350,000 from the previous week's revised figure of 376,000. The drop surprised economists, who had expected jobless claims to edge up to 375,000 from the 374,000 originally reported for the previous week.
However, the Labor Department noted that the unexpected drop reflected distortions caused by fewer auto plant shutdowns than normal during this time of year. The distortions are expected to unwind over the coming weeks.
In news from overseas, the Bank of Japan tweaked its asset purchase program, moving to buy more treasury-discount bills, but kept the overall size of its financial asset buying unchanged at 70 trillion yen.
The Japanese central bank held off on further monetary easing measures, believing that robust private consumption and spending on rebuilding after last year's earthquake will keep the country's economic recovery on track.
In overseas trading, stock markets across the Asia-Pacific region saw significant weakness during trading on Thursday. Japan's Nikkei 225 Index ended the day down by 1.5 percent, while Hong Kong's Hang Seng Index tumbled by 2 percent.
The major European markets also showed notable moves to the downside on the day. While the U.K.'s FTSE 100 Index fell by 1 percent, the French CAC 40 Index and the German DAX Index dropped by 0.7 percent and 0.5 percent, respectively.
In the bond market, treasuries moved modestly higher over the course of the session, extending a recent upward move. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its prices, edged down by 1.9 basis points to 1.479 percent.
Reflecting weakness in the tech sector, computer hardware stocks posted steep losses on the day, dragging the NYSE Arca Computer Hardware Index down by 1.9 percent. Lexmark (LXK) helped to lead the sector lower after Barclays downgraded its rating on the stock to Underweight.
Semiconductor and networking stocks also saw considerable weakness, with the Philadelphia Semiconductor Index and the NYSE Arca Networking Index both falling by 1.7 percent.
Outside of the tech sector, significant weakness was also visible among airline stocks. The NYSE Arca Airline Index fell by 1.7 percent after ending the previous session at a four-month closing high.
While financial, telecom, and steel stocks also ended the day firmly in the red, housing stocks showed a strong move to the upside. Reflecting the strength in the housing sector, the Philadelphia Housing Sector Index advanced 1.6 percent.
Earnings news is likely to take center stage on Friday, with financial giants JP Morgan (JPM) and Wells Fargo (WFC) due to release their quarterly results before the start of trading. JP Morgan is expected to shed further light on its massive trading loss.
Trading could also be impacted by the release of reports on U.S. producer prices and consumer sentiment as well as any significant developments overseas.
by RTT Staff Writer
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